FEDERAL COURT OF AUSTRALIA Registrar of Aboriginal and Torres Strait Islander Corporations v Monaghan (No 3) [2016] FCA 1189 File number: ACD 22 of 2015 Judge: GRIFFITHS J Date of judgment: 6 October 2016 Catchwords: COSTS – discretion under s 43 of the Federal Court of Australia Act 1976 (Cth) – limited success by applicant - whether judgment obtained by applicant less favourable than the terms of third respondent's offer – Held: applicant to pay two thirds of third respondent's costs. Legislation: Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth), ss 263-1, 265-1, 265-10 Federal Court of Australia Act 1976 (Cth), s 43 Federal Court Rules 2011 (Cth), Pt 25, r 25.14 Cases cited: Latoudis v Casey [1990] HCA 59; 170 CLR 534 Date of hearing: Heard on the papers Registry: Australian Capital Territory Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 10 Solicitor for the Applicant: Minter Ellison Counsel for the Third Respondent: Mr C Wilson Solicitor for the Third Respondent: Pennicott Weir Lawyers ORDERS ACD 22 of 2015 BETWEEN: REGISTRAR OF ABORIGINAL AND TORRES STRAIT ISLANDER CORPORATIONS Applicant AND: FRED MONAGHAN First Respondent TERESA ELSA MONAGHAN Second Respondent KIM MAREE PETERS Third Respondent JUDGE: GRIFFITHS J DATE OF ORDER: 6 October 2016 THE COURT ORDERS THAT: 1. The applicant pay two-thirds of the third respondent's costs of the proceedings, as agreed or assessed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT GRIFFITHS J: 1 Reasons for judgment were handed down in this matter on 20 September 2016 (see Registrar of Aboriginal and Torres Strait Islander Corporations v Monaghan (No 2) [2016] FCA 1143 (Monaghan (No 2)). For convenience, the same abbreviations will be used here as in Monaghan (No 2). 2 The applicant and the third respondent (Ms Peters) availed themselves of the opportunity to make brief written submissions on the question of costs. That issue was then determined on the papers. These are my reasons in relation to that question. 3 The applicant's case against Ms Peters essentially involved three claims, namely that Ms Peters had breached s 265-1 of the CATSI Act (duty of care and diligence); s 265-10 of the CATSI Act (duty to not improperly use position) and s 263-1 of the CATSI Act (failure to ensure adequate records are kept). 4 The applicant sought orders that Ms Peters: (a) be disqualified from managing a CATSI Act corporation for a period of three years; (b) pay a pecuniary penalty of $18,550; (c) pay compensation (jointly and severally) of $342,530 plus $7,054.74 for unpaid rent; and (d) pay the applicant's costs. 5 The applicant's success was limited to his claim against Ms Peters concerning a breach of s 263-1 of the CATSI Act. The Court made a declaratory order in respect of that contravention and also disqualified Ms Peters from managing a CATSI Act corporation for a period of six months. 6 Against this background, the applicant has submitted that there should be no order as to costs. Ms Peters has submitted that costs must take into account the applicant's rejection of an offer which was made by her on 5 July 2016 which included the following elements: (a) the applicant withdraw his claim against Ms Peters; (b) Ms Peters make payment of the outstanding rental payments, totalling $3,520 over a period of 12 months; (c) Ms Peters agrees not to be involved in managing a CATSI Act corporation for a period of three years; and (d) there be no order as to costs. 7 Ms Peters submitted that, relying on Pt 25, r 25.14 of the Federal Court Rules 2011 (Cth), in the light of the applicant's rejection of this offer and other relevant matters, including the applicant's relatively limited success against Ms Peters, the applicant is not entitled to any costs for the period shortly after the offer was served and the applicant should be ordered to pay Ms Peters' costs after that time on an indemnity basis. 8 It is well settled that the power of the Court to award costs under s 43 of the Federal Court of Australia Act 1976 (Cth) involves a broad discretion which must nevertheless be exercised judicially. It is equally well settled that costs are not awarded by way of punishment of the unsuccessful party but are compensatory in the sense that they are awarded to recompense the successful party against the expenses to which he or she has been put by reason of the legal proceedings (see Latoudis v Casey [1990] HCA 59; 170 CLR 534 at 543 per Mason CJ). 9 Given the applicant's relatively limited success in his claims against Ms Peters I do not accept his submission that there should be no order as to costs. Nor do I accept Ms Peters' submission that she should be awarded costs on an indemnity basis. That is because I do not accept that the judgment obtained by the applicant against her is less favourable than the terms of the offer which was set out in Ms Peters' solicitor's letter dated 5 July 2016. In particular, as noted above, the applicant was successful in respect of one of his three primary claims against Ms Peters, which resulted in both a declaratory and a disqualification order being made against her. 10 Having regard to the applicant's relatively limited success, together with the other matters which have been raised by the parties, I consider that the appropriate order is that the applicant pay two-thirds of Ms Peters' costs, as agreed or assessed. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Griffiths. Associate: Dated: 6 October 2016